Bernard Otabil
The Bank of Ghana (BoG) has emphasised its commitment to its price stability mandate and the well-being of Ghanaians.
Director of Communications at the BoG, Bernard Otabil, disclosed this when he explained the cost incurred on the bank’s open market operations, which contributed largely to its loss in the audited 2023 financial statements.
The recently released annual report and financial statements of the bank, indicated a cost of GH¢8.3 billion on open market operations, causing an overall loss of GH¢10.5 billion for the 2023 financial year.
According to Mr. Otabil, central banks worked for national welfare and not profits, and therefore the loss had nothing to do with a loss of policy effectiveness, adding that the central bank stood committed to deploy monetary policy tools to maintain a stable inflation in tandem with its primary price stability objective.
“From December 2022 to December 2023, headline inflation decreased from 54.1% to 23.2 percent and that has come with a huge cost. However, the long term benefits of low and stable inflation always outweigh the costs incurred in the short term to bring it down,” he noted.
“Compared to the GH¢1.7 billion cost of open market operations in 2022, the almost five-fold increase in mopping up liquidity from the economy to reduce inflation is significant”, Mr Otabil explained.
Explaining further, he averred that central banks could register losses, get into negative accounting equity and yet function completely successfully.
“Therefore, central banks are not expected to compromise policy objective to report handsome profit. Our strong actions to control inflation reinforce our credibility and commitment to our mission. Showing that we can effectively manage inflation, boosts confidence both domestically and internationally. This trust is vital for attracting foreign investment and maintaining favorable trade conditions,” Mr. Otabil said.
The core mandate of the Bank of Ghana is to pursue policies aimed at achieving a stable level of inflation in line with its medium-term target of 8 percent, however, it could tolerate inflation fluctuations of +/- 2 percentage points of the medium-term target.
By Samuel Boadi